Question $2(45$ points$)$

You need to assess two CNC machines. First one has a purchasing price of $20000$ KD and operational yearly expenses $150$ KD for the whole its useful life of $10$ years. Selling company states that a $500$ KD maintenance will be conducted at the beginning of year five to ensure the normal functioning of the machine and that after $10$ years the machine can still be sold out at a price of $800$ KD$.$

Second CNC machine will cost you $25000$ KD and operational yearly expenses are $100$ KD$,$ but starting from the year six, they will increase with $60$ KD until the end of its lifecycle of $12$ years, because of continuous maintenance. The salvage value is estimated to be not less than $1500$ KD$.$

a$-)(15$ points$]$ Evaluate first option.

b$-)[15$ points$]$ Evaluate second option.

c$)-[5$ points$]$ Make a decision.

d$-)[10$ points$]$ Explain your decision